Be careful what you sign

When I got back to the office after closing on my new house, a coworker quickly handed me a document and asked me to sign it. A paragraph or two of small type on the paper said I'd turn over all of my assets to her, or something like that. I grabbed a pen and signed it -- using the name Washington Irving.

It wasn't a bad try, though. My wife and I had just spent a lot of the morning signing document after document, our signatures gradually devolving from pretty recognizable groupings of letters into abstract, lumpy lines. I spent only a little more time reading them than I do before I click “I AGREE' when downloading apps for my phone.

“I think when people are handed form contracts, or see contracts online for example that are presented to you by iTunes or whatever they often don't read them,' he says. “I think when people are handed a tailored contract, like an employment contract or something like that, they tend to read them more carefully.'

I asked if he reads every contract before signing.

“No. Even law professors, even contract professors don't read every contract that they sign.'

That ever backfired?

“No,' he says. “But I think that people should understand that in many cases you are going to be bound by this thing.'

He wants to be clear: The contract is a legal document. It's binding. And he guesses you already know that.

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“The interesting thing is that most consumers actually do seem to expect to be bound to these contracts, even if they don't read them,' Peppet says. “They'll generally say, 'But, I think the law will protect me if the contract is unfair.' And that's actually about what the law says. That's a pretty good approximation. If the contract is really unfair or fraudulent in some way, then the consumer's probably right.'

That line -- where the law will protect you -- is pretty far out there. You can't just get out of a deal you later regret. The deal has to be unconscionable -- legally, not just in your opinion -- or fraudulent.

The Legal Information Institute at Cornell University Law School puts it this way: “A contract is most likely to be found unconscionable if both unfair bargaining and unfair substantive terms are shown. An absence of meaningful choice by the disadvantaged party is often used to prove unfair bargaining.'

“It's pretty hard to prove that a contract is unconscionable,' Peppet says.

But we “sign' more contracts than ever -- how can we protect ourselves?

Try to know who you're dealing with. “Reputational controls on people's behavior are really really important,' says Peppet. “Businesspeople say to me, if it comes down to reading a contract, then something has gone really wrong already.' Search the internet for clues that the people who want your business might not be dealing in good faith. Review these tips for avoiding common scams.

Be more vigilant when you're spending more money. “Let's talk about serious transactions for a minute: buying a house, employment or buying a car,' says Peppet. “Those are the big ones. In most of those situations, people should get a lawyer or a real estate agent.'

Peppet encourages consumers to be more vigilant in general. “The little stuff, I would encourage people to read as much as possible.

“But,' he says, “some of it they're not going to.'

One more tip: Be especially careful when you're at your most vulnerable, whether you're sick, unfamiliar with the type of transaction you're making, or just fatigued. You could do worse than being tricked into signing everything over to the office smart aleck.

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